There's been a notable change in appetite for Triple-S Management Corporation (NYSE:GTS) shares in the week since its annual report, with the stock down 14% to US$14.99. It was an okay report, and revenues came in at US$3.4b, approximately in line with analyst estimates leading up to the results announcement. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the latest consensus from Triple-S Management's only analyst is for revenues of US$3.61b in 2020, which would reflect a credible 7.0% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 30% to US$2.80 in the same period. Before this earnings report, analysts had been forecasting revenues of US$3.66b and earnings per share (EPS) of US$2.54 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the decent improvement in earnings per share expectations following these results.
The average analyst price target fell 22% to US$21.00, suggesting that analysts have other concerns, and the improved earnings per share outlook was not enough to allay them.
In addition, we can look to Triple-S Management's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Triple-S Management's rate of growth is expected to accelerate meaningfully, with forecast 7.0% revenue growth noticeably faster than its historical growth of 4.6%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 6.6% next year. Triple-S Management is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Triple-S Management following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Triple-S Management's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Triple-S Management going out as far as 2021, and you can see them free on our platform here.
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